Thread: FireWeatherMet Account Talk

Could not post earlier (out on the mountain skiing at 10,000 ft) but upon seeing the massive selling on Monday being the "Blood In The Streets" and Tuesday selling seeming to stall out, it seems the Market has factored current events in. Yes there will be rate hikes, yes short term Oil spike and that could lead to even worse inflation, which is partly the reason for Monday's big sell-off.

But today, it seems things reversed. Newest talk is US buying Venezuelan oil again, to make up the 3% shortfall sans Russian Oil.
Also, Ukraine-Russian war has quagmired, and Russia has basically no ay out, no way to really win and occupy Ukraine, no way to survive a few weeks or months at most with massive economic sanctions. And on our side, it means we might be ramping up domestic energy production, and we are seriously emerging from the Pandemic in a final way, finally. So our economy should continue to boom.

So when I saw markets open and shoot 2% upward, the charts also showed us emerging from a possible "Double Bottom". Actually the lows this week didn't go quite as far as the previous intraday low of last week, but close enough. In addition, my system relies on staying ahead of the C and S funds, and I was 4-6% ahead of them this morning. Definitely lost 2-3% of that today, but at least now I'm aligned with them, as I've used my first March IFT to go 100% C COB Wed March 9th.

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The Federal Gubmint does not buy oil - except maybe to replenish the Strategic Political Reserves. Why would an oil company buy from Venezuela even if allowed to do so? Why take that moral, economic, and political risk? Anybody want some politician ranting about oil blood money in a month or two. Anybody want a bunch of people in Birkenstocks and burlap sacks protesting outside their home. Maybe they will see a potential for profit, but I think not. If I were EXON I would not touch Venezuelan (or, now Russian) oil with a 10ft pole. And, if I did I would have to contract it, purchase it, ship it, refine it, distribute it...

Personally, if I were Standard Oil I would prefer to drill in the ANWAR or Texas or California or Oklahoma or Pennsylvania or the Dakotas than refinance the dilapidated oil 'industry' in Maduroland. Why dump money into that cesspit only to have it nationalized next year.

And, wow, just wow about buying from Iran. Nope, not going to do it. Just nope.

The best we can hope for is that the Egalitarian French and the Moralizing Germans buy their oil from blood soaked hands, leaving cleaner oil for us to buy. That will take LOTS of time.

Personally, I think we are in a Double Bottom Normal. The Double Bottom will Double Bottom for quite some time. The New Normal. Maybe not a crash, but a nice stagflation.

GLHF

Originally Posted by Boghie

The Federal Gubmint does not buy oil - except maybe to replenish the Strategic Political Reserves. Why would an oil company buy from Venezuela even if allowed to do so? Why take that moral, economic, and political risk?

GLHF

Perhaps I didn't explain it well enough, or you failed to understand it.
The "Gubmint" DOES ban private companies from buying/importing oil from certain countries (see Russia). These bans also exist on Venezuela. If Venezuelan oil was allowed to flow back into the US marketplace, it could make up the 3% shortfall the US is losing from Russian Oil.
As for "Moral" risk, lets face it, we import a lot of oil from much more immoral countries (Saudi Arabia) where they desecrate women and kill political opponents, even murder and dismember US based journalists. Venezuela ranks on the "Almost, But NOT As Immoral as Saudi Arabia" list.

Originally Posted by FireWeatherMet

Perhaps I didn't explain it well enough, or you failed to understand it.
The "Gubmint" DOES ban private companies from buying/importing oil from certain countries (see Russia). These bans also exist on Venezuela. If Venezuelan oil was allowed to flow back into the US marketplace, it could make up the 3% shortfall the US is losing from Russian Oil.
As for "Moral" risk, lets face it, we import a lot of oil from much more immoral countries (Saudi Arabia) where they desecrate women and kill political opponents, even murder and dismember US based journalists. Venezuela ranks on the "Almost, But NOT As Immoral as Saudi Arabia" list.

Other options:

• Or, we produce more internally
• Or, we could import more from decent countries

We are producing 9% less oil domestically than we did when gas prices were $2/gallon in 2019. Domestic production increased every year from 2016 through 2019 and started declining in 2020.
Canada is willing to export more oil to us. We need the infrastructure to move it though. Apparently, they can export a portion of the loss expected from Russia right now - using freight cars and the like, but that will be expensive and dangerous.

We do not need to import oil from unsavory countries - or, at least we don't have to import more oil from unsavory countries. Let's pump it ourselves and ship it from Canada!!! I'm very happy we are banning oil imports from Thug Kleptocracies like Putin and Maduro. I would like to work on dumping the useless, corrupt oil ticks in Saudi Arabia et al as well.

Boghie - I appreciate your sharing, as always - and your thoughts and information here on oil, that seem sound and agreeable to me. Thought I'd add that I heard good news piece recently that points to another significant factor regarding oil supply - and use (refining & processing)... that much of our USA oil (ie. Texas crude) is "sweet crude" with much less sulfur than dirtier crude (I think the stuff from middle-east & Russia & even Venezuela is that type); the rub is that it seems the big oil companies in USA have refineries designed for and processing the non-sweet oil, a major decision they made some years ago & invested billions to do so... that they cannot make their products out of Sweet-crude with those refineries as-is, & it would take a lot of time and $s for them to reconfigure to be able to do so. I guess that's why USA imports other's crude and we export our sweet-stuff to other countries who's refining IS set up for it. Go figure?? I'm not an oil expert so IDK. Maybe the Canada oil is not the sweet stuff?
Anyway, also appreciate your market comments -- if it is a double bottom & moving up for awhile, good move on your part & I have missed it after today's action and yesterday's... yet I'll hope for another significant retreat of equity prices soon (& plenty of potential for that too) for a possible buy-in opportunity.

Originally Posted by Boghie

• Or, we produce more internally
• Or, we could import more from decent countries

We are producing 9% less oil domestically than we did when gas prices were $2/gallon in 2019. Domestic production increased every year from 2016 through 2019 and started declining in 2020.

We've actually been increasing oil production rapidly in the last few months. Official numbers still not in, but best estimates are over 12 MIL Brls produced this Feb and the next few months will be significantly higher. That rivals our 2019 production numbers and will surpass it shortly.
https://www.eia.gov/todayinenergy/detail.php?id=51318

The medium to long range solution is to GET OFF OIL as our primary fuel, NOT deepen our dependency on it. Oil is a global commodity whose global price is influenced mostly by OPEC, regardless if we pump as much as we consume. We export because US Oil is a CAPITALIST industry, not a "NATIONALIZED SOCIALIST" one.
FYI price was $2 a gallon in 2020 because of Pandemic squashing demand, and OPEC nations overproducing. But if you want to "Socialize" the US oil industry there are some benefits, we could be like Saudi's where their people pay less than $1/gal. Plus there would be no OIL PAC $$ going to their fav political party.

And good point from FAAM, that refineries aren't fully equipped to process just US Sweet Crude, another reason why our imports of oil will always be needed to a certain degree. Until we can switch most road/rail transports to EV, only then relying mostly on domestic oil for other limited fuel needs (air/military use).

We have a way to go on the EV conversion. According to USEIA https://www.eia.gov/tools/faqs/faq.php?id=427&t=3 in 2021 61% of our electric power was generated by fossil fuels, including 13% from coal. (OMG) 19% nuclear and 20% renewable resources. Hydro being renewable in the west is a question in itself. Conversion of all trains and automobiles to electric will increase demand for electric power. The source of this electricity will probably not change much percentage wise so we will still need petroleum for vehicles and trains indirectly.

It will NEVER work, maybe Nuclear, but that's big bucks!! moneypot.gif

the article you posted doesn't show us rivaling 2019 output right now? And conversion to renuable will take a long time to increase our infrastructure to route that power around.. nuclear makes sense.. let's fund that but for now increase oil production here so our economy doesn't crash on high energy prices.

Originally Posted by kb9nvh

the article you posted doesn't show us rivaling 2019 output right now? And conversion to renuable will take a long time to increase our infrastructure to route that power around.. nuclear makes sense.. let's fund that but for now increase oil production here so our economy doesn't crash on high energy prices.

Nuclear would seem the way to go.
There are problems however that make it extremely expensive to build and protect. How do you protect from accidents like Chernobyl and what happened in Japan? What do you do with the spent fuel rods? Where do you store them? They can stay radioactive for hundreds of years. What kind of physical protection do you provide for the facility and the storage areas? That's all we need is for some radical group to get their hands on some fuel rods or try to destroy a facility and cause a meltdown.

Renewable energy has its own problems because of startup costs. Once the infrastructure is in place it should be cost affective. Think about how expensive it was to bring electricity to everyone's home and to build the power plants.

Originally Posted by nnuut

It will NEVER work, maybe Nuclear, but that's big bucks!!

A lot of NIMBY'ism and fear mongering by those with something to gain by subsidies. Knee jerk reaction by Germany to shut down all nuclear plants after Fukashima sounded good and got votes at the time, but they have a whole generation brainwashed into ESG and are pressuring the EU to follow suit.

Nuclear is the best answer. Solar and wind could subsidize, but wind comes with high maintenance costs and solar will have to become more efficient.

I've always been baffled by the fact that we consume so much oil, yet we export a good amount of ours.

EV's will work if we can somehow wave a magic wand and replace/upgrade all existing electrical infrastructure. I have no faith in this happening.